Vancouver-based Thinkific Labs has announced plans to lay off 100 employees after recording a net loss $26.4 million USD last year.
The layoffs are set to impact one-fifth of Thinkific’s 499-person team, affecting employees in general, administrative, and customer support functions, and result in “a reduced management layer.” They also consist of “targeted reductions” in research and development (R&D) and sales and marketing.
After a year of strong revenue growth, mounting losses, and a dropping share price, Thinkific has decided to scale back its workforce.
Thinkific made its Toronto Stock Exchange debut in April 2021, nearly doubling its headcount from 270 at the end of Q1 2021 to 499 today. But after experiencing a year of strong revenue growth, mounting losses, and a continually dropping stock price, Thinkific has decided to scale back its workforce.
After hitting a 52-week high of $19.47 last summer, the company’s shares have plummeted to $2.98 apiece at time of publication.
In a statement released by the company, Thinkific co-founder and CEO Greg Smith said Thinkific determined that by reducing its workforce by 100 people, “we could increase efficiency and lower costs without impacting our growth trajectory.” According to Smith, the decision follows a “rigorous review” of Thinkific’s organizational structure.
“While it is the right decision for the business, it was not one we made lightly,” said Smith. “Everyone at Thinkific has played a role in the success we’ve had to date, and we are immensely grateful for their contributions.”
Founded in 2012, Thinkific offers cloud-based software that helps entrepreneurs and businesses launch, grow, and diversify their businesses by creating and selling online courses and other learning products through its platform.
Thinkific went public on the TSX last April, raising more than $160 million CAD through its initial public offering (IPO) amid a slew of other Canadian tech IPOs. The software firm elected to go public to improve awareness of its brand, increase the company’s financial flexibility, and facilitate future access to public capital markets.
In an interview with BetaKit last year, Smith elaborated on the company’s growth strategy. According to the CEO, Thinkific opted to tap public markets to raise funds for R&D, support its ambitious hiring goals, and strengthen its balance sheet.
“There’s just such a huge opportunity for us to go out and help more entrepreneurs and small businesses,” said Smith at the time. “The market forces really were already there, like the rise of the entrepreneur and the whole course creator economy.”
But after a mixed 2021, Thinkific has opted to scale back its headcount with layoffs that are set to affect the firm’s R&D efforts and one-fifth of the company’s 499-person team. Thinkific said the moves “better reflect the areas of focus and growth” at the company.
In 2021, Thinkific’s annual revenue grew 81 percent to $38.1 million USD, compared to the $21.1 million in revenue the company recorded the year prior.
But Thinkific’s losses also grew—the company posted a net loss of $26.4 million last year compared to 2020, when it lost only $1.3 million. Thinkific attributed this increased loss to rising expenses and a competitive job market as it executes on its growth strategy.
“This is a difficult day for the Thinkific team, but we are resilient,” said Smith. “I am confident in our future.”
According to Smith, despite the layoffs, Thinkific’s product-led growth strategy “remains unchanged,” and the company’s “business performance is on track.” Thinkific is set to report its first-quarter 2022 results on May 5.
Feature image courtesy Thinkific.